Peak Oil FAQs

• Q: Why do people talk about peak oil when there’s lots of oil left to be discovered?

  A: The term peak oil refers to the rate which oil is produced, usually in barrels per day. A barrel is 42 gallons. Current global petroleum production is about 75 million barrels per day, plus about 10 million barrels per day of other so called ‘liquids’, like biofuels, LNG, and condensates.

  Oil can only be produced after it has been found. Global oil discovery peaked in the 1960s, and the amount of oil we use per day matched the amount of new oil found in about 1980, and we have been draining already found reserves ever since. This process is known as ‘depletion’.

  What’s more important, however, is the fact that out of the oil found, we always produce the easiest first, so not only have we most probably hit a peak of possible production, future production will become increasingly complex, difficult, and will yield on average lower and lower quality crude, until we get to the current state, where we have to rely on what are called tar sands, thick, tar deposits that require very inefficient and heavy duty processing to extract and refine.

Peak Oil Resources

There’s a lot of matieral out there, here’s some good places to start:

• The Hirsh Report The US government sponsored study of peak oil, written by Robert L. Hirsh. The government didn’t much like what it said, so it became difficult to find, but is now again available. See also Hirsh’s companion report The Shape of World Oil Peaking and other studies

  Also take a look at a review of the Hirsh report on resourceinvestor.com. It’s quite chilling.

  1. World Oil Peaking is Going to Happen
  2. Oil Peaking Could Cost the U.S. Economy Dearly
  3. Oil Peaking Presents a Unique Challenge (“it will be abrupt and revolutionary”)
  4. The Problem is Liquid Fuels (growth in demand mainly from transportation sector)
  5. Mitigation Efforts Will Require Substantial Time
  6. Both Supply and Demand Will Require Attention
  7. It Is a Matter of Risk Management (mitigating action must come before the peak)
  8. Government Intervention Will be Required
  9. Economic Upheaval is Not Inevitable (“given enough lead-time, the problems are soluble with existing technologies.”)
  10. More Information is Needed

• There’s a very good Peak Oil Overview video presentation that’s well worth a closer look. It’s about 1 hour long, and the Professor (an economist, of all things!) gives a very good summary of the best current understanding of the question.
• Twightlight in the Desert, by Matthew Simmons. This is a great book on pretty much every level. It shows, from the inside (using Society of Petroleum Engineers documents), how oil is actually produced in the modern world, along with a fairly complete history of the Saudi oil fields, and, with that foundation, goes on to explain why Saudi oil production is very likely close to peaking. His latest research shows that this event is much closer than we think. If you don’t read anything else, read this book.
  

  Mr. Simmons became suspicious of Saudi claims after taking a guided tour of Aramco facilities in 2003. To penetrate the veil, he turned to the electronic library of the Society of Petroleum Engineers, which regularly publishes technical papers by field geologists. After downloading and studying more than 200 reports by Aramco personnel, Mr. Simmons came up with his own portrait of Saudi Arabia’s oil resources. It is not a pretty picture.
  (Wall Street Journal, June 28, 2005) (quoted here)

• If you want to listen to some interviews with Matt Simmons, you can find a solid collection at globalpublicmedia.com.
• Pieak Oil Analysis, 2007 (pdf) Explains concepts and data that helps understand the question of oil production peaking. From www.peakoilassociates.com.
• Key Oil production terms: a list that explains reasonably well the core concepts, from depletion, production, reserves, etc.
• satelliteoerthedesert.blogspot.com Good site by someone with enough time on their hands to actually use google earth to track Saudi oil field development over time.
• ASPO International, peakoil.net The first to really sound the alarm, home of petroleum geologists like Colin Cambell and Jean Laherrere.
• M. King Hubbert The first to successfully predict US peak oil production (it peaked at around 1970, exactly as he said it would). Global production also looks like it peaked just around when he said it would (2000 or so, give or take some years) He used that good old commodity common sense to note that there is a direct relationship between oil discovery, oil production and the subsequent production peaks. For the record, the peak of production follows about 40 years after the peak of discovery.

  There’s many M. King Hubbert resources on the web, try this google search to get started.

Petroleum and Energy Information and Resources

• UpstreamOnline.com – Crude oil spot prices Up to date listing of the different crude spot prices globally, helps see what oil is really doing out there in the real world.
• Energy Export/Import Databrowse Very useful graphical tool to see the energy import/export data for any region or country in the world. Obviously, once you see the real numbers you’re probably going to have to forget about all that nonsense Fox propaganda network is spouting.
• This Week In Petroleum Weekly Petroleum Data from the EIA (Energy Information Agency)
• World Crude Oil Prices Src: EIA
• Inflation Adjusted Oil Price Chart. A picture is worth a thousand words. This tells the real story behind the price of oil.
• This Week In Petroleum: Crude Prices Src: EIA
• Petroleum Publications Src: EIA
• World Oil Issues Department of Energy, National Energy Technology Laboratory. This one has a lot of pdfs dealing with many scenarios, many of which are fast proving to have been far too conservative.
• Crude Oil Future Prices. Up to date information on current crude oil futures.
• Oil Price History and Analysis Excellent graphs of oil prices and production. Pricing is in constant dollars, so you can do meaningful comparisons. Also has country by country production numbers for key countries, OPEC, etc. Good resource, check it out.
• Russia: A Critical Evaluation of its Natural Gas Resources. Natural gas peak production is very close, and since natural gas is primarily a regional commodity (ie, it’s very expensive and inefficient to liquify and ship it as LNG), these problems will become increasingly severe on a regional level. See Russia’s cutoff of natural gas in winter of 2008-9 for example, explained away as a reaction to Ukrainian problems, but very possibly made also necessary by a very cold winter in Russia itself (yes, decisions can have more than one cause, believe it or not!)